MIXED OUTLOOK FOR MINING SECTOR

Written on the 12 November 2013

BIS Shrapnel has expressed confidence in the future of mining in Australia, despite forecasting a decline in employment figures across the sector.

In its Mining in Australia 2013 to 2028 report, the independent economic forecaster and industry analyst said that mining production growth will compensate for a fall in mining investment, which peaked in 2012/13.

The latter is forecast to decline 20 per cent over the next five years, while production is predicted to grow 41 per cent over the same period.

“Over the next five years, the strong boost from mining production, led by LNG and iron ore, will more than offset the economic negatives from falling mining investment which will flow through to construction and manufacturing,” says senior manager of BIS Shrapnel’s infrastructure and mining unit Adrian Hart.

Hart says mining activity as a share of GDP is anticipated to rise from 18.7 per cent to 19.8 per cent as a result of this production increase.

“Australia will become a more mining-focused economy from here.”

However, production growth isn’t expected to boost employment, as mining operations opt for cost reduction strategies.

Hart says the approach is based on predicted lower commodity prices and a higher Australian dollar over the next few years.

“Mining operations are going to extraordinary lengths to cut back on the high costs / low productivity culture combination which characterised the construction phase of the boom,” he says.

“We expect that employment will rise only 11 per cent over the next five years across these operations, mainly in oil and gas and iron ore, whereas mining construction employment will slump 40 per cent.”

The annual BIS Shrapnel study is unique in reporting market information and forecasts for mineral and energy commodity markets and activities undertaken at each stage of the mining life cycle.